Michael Jones

Historically general insurers, including captives, used run-off triangles as a key tool to predict future levels of claims and reserve for them. This triangulation method involves recording observed data about total known claims amounts (paid or incurred) at regular intervals in each policy year. The data points are arranged in a table, with rows corresponding to policy years and columns corresponding to time since the policy’s inception. The earliest policy years have entries in more columns than more recent policy years, so the table of known data takes on a triangular shape.

Download article